| WEEKLY ROUNDUP
Hello, Reader. In the spirit of the holiday season, I’d like to share a small gift with you: a particular stock I’ve been closely watching. It is a battery metals company that I’ve held long-term. And although it’s not garnering the same media buzz as some of its peers, this company recently hit a 52-week high… and I believe it could continue to outperform in the months ahead. Here’s why… Electric vehicles (EVs) and other green technologies require battery metals – like copper, nickel, lithium, and aluminum – and, as such, are creating powerful long-term demand trends. These metals all play a critical role in a megatrend I first highlighted more than four years ago. I called it the “Second Electric Revolution,” which continues to accelerate, particularly in the rapidly expanding EV and energy storage sectors. That spells good news for Alcoa Corp. (AA), the largest U.S.-based aluminum producer. Now, aluminum does not receive the same high-profile attention that other battery metals do, but the solar industry is a prodigious consumer of aluminum, and, as I said, so is the EV industry. Alcoa’s current valuation is cheap enough that the stock could deliver outsized gains, especially if aluminum demand ramps up more quickly and powerfully than investors currently expect. While the price of aluminum fell sharply after the 2022 spike – during the early days of the Ukrainian invasion – the long-term outlook remains strong. A report from the London-based International Aluminium Institute (IAI) finds that global aluminum demand will jump about 40% by 2030 – and cleantech industries will power most of that growth. As a result, the report states that aluminum producers will need to ramp up their production from 86 million metric tons in 2020 to 120 metric tons by 2030. According to the research firm Wood Mackenzie, solar industry demand for aluminum could increase from just under 3% of total world consumption to nearly 13% by 2040. In the EV industry, aluminum does not play a significant electrification role, but the body and chassis of each Tesla Model S contains about 410 pounds of aluminum! That’s no accident. Because aluminum is so much lighter than steel, EV manufacturers covet the metal. An aluminum vehicle can travel much farther on a single charge than a steel vehicle can. For this reason, many EV manufacturers are ramping up their aluminum consumption. In fact, aluminum is the fastest-growing material in the automotive market. Wood Mackenzie expects aluminum demand for EVs to hit 2.4 million tonnes by 2025, and then quadruple to nearly 10 million tonnes by 2040. At that point, EV demand for aluminum would total about 12% of the global total. Obviously, these forecasts are merely guesses, but the trend is clear. EV demand for aluminum is ramping higher. And that’s just one source of demand from the cleantech sector. According to the IAI, renewable energy needs will create demand for aluminum to replace existing copper cabling for power distribution. In total, the electric sector will require an additional 5.2 million metric tons by 2030, according to the group. You get the idea. Despite the strong supply-demand dynamics in the aluminum market, the Alcoa share price is reflecting all doom and no boom. However, from this low valuation, Alcoa offers substantial upside potential. | 
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